SEBI Market Ban: Why Zee Entertainment, Punit Goenka Are Now At SAT’s Door

Zee Entertainment Enterprises Ltd (ZEEL) and CEO Punit Goenka have approached the Securities Appellate Tribunal (SAT) challenging a Securities and Exchange Board of India (SEBI) order that barred them from accessing the securities market, according to a Moneycontrol report.

SAT on Monday listed the matter for hearing on Wednesday after counsel appearing for ZEEL sought an urgent hearing and interim relief. The appeal comes days after SEBI barred the company from the securities market for two months.

Why SEBI Barred ZEEL And Goenka

Under its July 31 order, SEBI also barred Goenka and Zee promoter Subhash Chandra from accessing the securities market for 12 months each. The regulator imposed penalties of ₹30 lakh on ZEEL, ₹58 lakh on Goenka and ₹60 lakh on Chandra, taking the total monetary penalty to ₹1.48 crore.

The regulatory action relates to SEBI’s findings on the alleged unauthorised use and pledge of ZEEL’s property in Hyderabad’s Jubilee Hills as security for loans taken by four Essel Group entities from Indiabulls Housing Finance.

According to SEBI’s findings, the property was used to secure loans of around ₹726 crore. The title deeds were deposited in December 2018 and were released in June 2020 after around ₹225 crore was repaid.

SEBI also flagged the absence of required approvals from ZEEL’s audit committee, board and shareholders. The regulator alleged that the company failed to make adequate disclosures related to the pledge, related-party transaction, contingent liability and other matters involving the property.

ZEEL Seeks Relief As Tribunal Hearing Looms

The proceedings also covered disclosures linked to litigation before the Delhi High Court, a non-disposal undertaking involving the property and the subsequent release of the title deeds.

ZEEL’s appeal before SAT is the next legal step against SEBI’s order. The company is expected to seek interim relief from the market-access restrictions when the tribunal hears the matter on Wednesday.

The regulatory action also came on the same day that ZEEL shareholders approved a proposed plan at an extraordinary general meeting (EGM). The approval had raised expectations around the company’s strategic plans and future direction.

However, the SEBI order on the same day added uncertainty for ZEEL and its promoters. The outcome of the SAT hearing will now be closely watched as the company seeks relief from the restrictions imposed by the regulator.